What is a HUD home & where do you find HUD Homes for sale? Simply put, a HUD home is a type of foreclosure where the property did not sell at auction and, as a result, was acquired by HUD. I’ll explain this in more depth later on and let you know where you can find HUD Homes for sale. The purpose of this post is to answer the following questions:
- What is HUD?
- What Are FHA Loans?
- What is a HUD home?
- Who qualifies for a HUD home?
- Where do you find HUD homes for sale?
- Other frequently asked questions
What Is HUD?
HUD stands for the Department of Housing & Urban Development. It was put in place by Lyndon Johnson in 1965 as part of the “Great Society” program to help eliminate poverty and racial injustice.
The purpose of HUD specifically is to address American’s housing needs including, but not limited to, the following:
- community development
- enforcing fair housing laws
- providing rental subsidies to lower-income families
- helping more families achieve home ownership
What Are FHA Loans?
The Federal Housing Administration (FHA) is part of HUD. A big way the FHA helps families achieve home ownership is by insuring FHA mortgage loans made by FHA-approved lenders throughout the United States and its territories.
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So, since the FHA is providing the lender with mortgage insurance, the lender is able to offer financing to borrowers who may not qualify for conventional financing. Here are some of the appealing features offered by FHA loans:
- borrowers with credit scores of at least 580 may qualify
- down payments as low as 3.5%
- Borrowers can receive up to 6% of closing costs paid by seller
What Is A HUD Home?
To understand “What is a HUD Home?”, you need to understand the steps involved for a home to become a HUD Home. Here’s quick rundown of how homes become HUD homes:
- homeowner is delinquent on their FHA mortgage loan payments
- home goes into pre-foreclosure
- lender gives homeowner grace period to pay what’s owed
- homeowner doesn’t meet bank’s demands during grace period
- lender attempts to sell property at auction
- property doesn’t sell at auction
- lender files claim with FHA to pay balance owed
- FHA pays the claim
- property is transferred to HUD
- HUD attempts to sell the property
So, what is a HUD home? A HUD Home is a foreclosure that is owned by HUD. You can find HUD Homes for sale by visiting hudhomestore.com
Who qualifies for a HUD home?
Anyone can purchase a HUD home. HUD does not offer financing, so you’ll need to work with a lender to get approved for a mortgage loan. You can purchase a HUD home with a FHA or conventional home loan. You can also purchase the property with cash.
Frequently Asked Questions
How Much Does One Pay For A HUD Home?
HUD Homes are sold online at hudhomestore.com. Once you find a property you like, you’ll need to place a bid through a real estate agent authorized to bid on HUD Homes.
How Do you Submit An Offer On A Hud Home?
Offer instructions can be found at hudhomestore.com. Select the “registered bidder” located at the bottom right of any listing.
Can investors purchase HUD homes?
Initially, there is an exclusive listing period where only owner-occupants can bid (usually several weeks). After this period expires, investors are welcome to submit offers.
What’s an FHA 203k loan?
The FHA 203k loan a loan backed by the federal government. It’s designed for qualifying buyers who buy older homes or homes that are in need of serious repairs.
The maximum amount you can borrow depends on the home and the loan, but the minimum you can borrow with a FHA 203k loan is $5,000.
How can I get HUD Home listings?
Visit hudhomestore.com for a list of HUD homes in your area
Will HUD buy my house?
No. HUD will not buy your house. You’ll need to put your house on the market by working with a local Realtor or attempting to sell it For-Sale-By-Owner (FSBO)
Finally, there are a few more things I would like for you to know prior to submitting an offer on a HUD Home:
- HUD will likely require an “earnest deposit” that will be held in escrow and applied toward the purchase price at closing.
- HUD properties are sold “as is” with no warranty.
- If you are a teacher, police officer, firefighter, or EMS personnel, you may qualify for the Good Neighbor Next Door program. If the property is located in a HUD-designated revitalization area, you can potentially receive a 50% discount if you live in the house for three years. The criteria for designating an area as a Revitalization Area are:
- Household Income,
- Homeownership Rate, and
- FHA-insured mortgage foreclosure activity.